Aug. 19, 2019 – This week is off to a good start. Although, for a bit of perspective, rallies on Friday and Monday have markets back to levels not seen since early last week.
We’re happy for the recovery, but remaining realistic in terms of where things stand.
Bond yields have risen from the depths plumbed last week, but are still pretty low. Trade with China is still a giant question mark that seems unlikely to be resolved soon and things in Europe, from the German economy to the prospect of a no-deal Brexit remain dicey.
The delay of about half of the new tariffs President Trump announced last month helped sentiment recover last week. It remains to be seen if China’s promised retaliation will be delayed as well.
Another interesting thing to watch will be the shifting narrative from the White House on tariffs. After insisting for more than a year that no one in the U.S. was paying tariffs, administration officials have started to acknowledge that import taxes do have an effect on businesses and consumers in the U.S. Trump acknowledged this weekend that Apple CEO Tim Cook made a “good case” when the two met recently, about how tariffs make Apple less competitive against rivals such as Samsung.
This comes on the heels of several officials saying that the delay is out of deference to the holiday retail season, although some officials, including trade adviser Peter Navarro continue to insist that tariffs are hurting anyone in the U.S.
While both a delay in the tariffs and the partial acknowledgement of how tariffs work are welcome, policy uncertainty remains a headwind. It is very difficult to run a business when you don’t know what the tax burden on your supply lines will be in the near future. This may be causing some of the slow-down in U.S. business spending we’ve seen in recent economic data at a time when the global economy can hardly afford for the U.S., which remains pretty healthy, to start pulling back.
In the near term, Wednesday’s Fed minutes are likely to be a market mover. Any hint that the central bank is leaning toward one or more rate cuts will be welcomed, while suggestions that rates are good where they are will be sold.
Economic Events this Week
Not a lot on the calendar this week. Wednesday’s Federal Reserve minutes are the highlight.
- 7:00 a.m. – MBA Mortgage Applications Index
- 10:00 a.m. Existing Home Sales
- 10:30 a.m. – EIA Crude Oil Inventories
- 2:00 p.m. – FOMC Minutes
- 10:00 a.m. – New Home Sales
Earnings Reports this Week
This week is loaded with retailers, particularly in the home-improvement and apparel spaces. There are some tech names in here that could be interesting as well.
- Before the bell: HD, KSS, MSG, MDT, PLAB, SE, SFL, TJX
- After the bell: CREE, JKHY, LAZB, TOL, URBN
- Before the bell: ADI, LOW, TGT, PLCE
- After the bell: LB, JWN, PSTG, SPLK, ZAYO
- Before the bell: BJ, DKS, HRL
- After the bell: GPS, HPQ, INTU, ROST, CRM, VMW
- Before the bell: BKE, FL, HIBB
Strong Sectors past Month
These sectors are up 5% or more in the last 20 trading days:
- Real Estate
Weak sectors past month
These sectors are down 5% or more in the last 20 trading days:
- Oil Services
- Metals & Mining
- Oil & Gas Exploration
- Cyber Security
- Robotics and Artificial Intelligence
- Regional Banks
Strong sectors past five trading days
No sectors are up more than 3% in the last five days.
Weak sectors past five trading days
These sectors are down more than 3% in the last five days.
- Junior Gold Miners
- Gold Miners